The National Academy of Social Insurance (NASI) sponsored a briefing on Friday where experts discussed the recently released Social Security Trustees report. Social Security's Chief Actuary Stephen Goss, Henry Aaron of the Brookings Institute and Charles Blauhous of the Hudson Institute, among others, spoke. The visuals prepared by the speakers are available online and are worth a look. Here is an excerpt from the materials prepared by Henry Aaron that caught my eye:
One-year change in value
Vanguard Prime Money Market [Mutual Fund]+ 1.97 %Vanguard Total Bond Market Index [Mutual Fund] + 3.85 %
[Vanguard] Target Retirement 2010 [Mutual Fund] -19.23 %
[Vanguard] Target Retirement 2050 [Mutual Fund] -32.43 %
S&P 500 Index -35.31 %
[Vanguard] Total International Stock [Mutual Fund] -43.11 %
Social Security + 5.8 %
Social Security = Security
By the way, if I had to guess, I would guess that we are likely to see Congress enacting some increase in Social Security benefit payments next year, despite the fact that the statutory cost of living adjustment formula would not grant such an increase. I would be surprised to see any action to address the long term solvency issues with the Social Security trust funds. in the next two years. Barbara Kennelly of the National Committee to Preserve Social Security and Medicare mentioned giving a "cost of living adjustment" to Social Security recipients despite the lack of an increase in the cost of living when she spoke on Thursday at the NOSSCR Conference. That was the first time I have heard that idea mentioned, but I am pretty sure that it will not be the last time I hear it mentioned. Doing this makes great political sense for Democrats. Yes, I know it is a bit irresponsible. The best defense I can give is that it is not nearly as irresponsible as ending the retirement earnings test, which the Republicans did just after taking control of Congress in 1994.
Update: Actually, the end of the retirement earnings test came in 1996 for those above full retirement age. It was part of the Contract with America Advancement Act.
Update: Actually, the end of the retirement earnings test came in 1996 for those above full retirement age. It was part of the Contract with America Advancement Act.
explain the 1984 elimination of earnings test by Republicans
ReplyDeleteWhat seems to escape the attention of a lot of people is that the irresponsibility is not justified because one or the other political party did it. Regardless, it (they) is the irresponsible actions of the U.S.A. We have dug ouselves a very deep hole. The irresponsibility must stop - now.
ReplyDeleteYeah, what earnings test was ended in 1994?
ReplyDeleteThe most recent major modification occurred in April 2000, when Congress enacted the Senior Citizens Freedom to Work Act of 2000, which removed the earnings test for individuals at the full retirement age (FRA), age 65 or older.
http://www.ssa.gov/policy/docs/ssb/v67n1/v67n1p1.html
And I believe it was Bill Clinton that signed that into law.
Sure lets give everyone a COLA bailout now. Law was just find as benefits went up and up. Now the one time they might not go up, we can't let that happen.
"Update: Actually, the end of the retirement earnings test came in 1996 for those above full retirement age. It was part of the Contract with America Advancement Act."
ReplyDeleteI think you better update again.
The most recent major modification occurred in April 2000, when Congress enacted the Senior Citizens Freedom to Work Act of 2000, which removed the earnings test for individuals at the full retirement age (FRA), age 65 or older.
http://www.ssa.gov/policy/docs/ssb/v67n1/v67n1p1.html
And it was Bill Clinton that signed that into law. So no matter which party had control of Congress, the president wasn't required to sign the bill and if he could shut down the whole government over not signing the budget, he could have vetoed it if he didn't agree with it.
Don't know where you are getting your update info, but it's wrong.
ReplyDeletehttp://www.ssa.gov/OACT/COLA/rteahistory.html
My memory of the gradual changes in the earnings deduction tests corresponds to A#4's. Otherwise, in regard to Kennelley's suggested "in lieu of COLA" increase, it makes sense. The rate of increase of medical care is significantly greater than inflation as measured by the COLA index. Considering the Part D "donut" in unreimbursed prescription medication reimbursement, and other out of pocket expenses for premiums, copays, deductables (sp), travel for treatment, and so on, it is reasonable to provide for a minimum increase even in the absence of other inflationary trends. A technical correction in the law could include this feature with little muss and fuss.
ReplyDelete"provide for a minimum increase even in the absence of other inflationary trends."
ReplyDeleteThen it's not a COLA and they might as well go back to the way it was before the law was put in place and vote on what the increase will be each year.